Bushveld Energy: an exciting year of growth as first project executed

AIM-listed integrated vanadium producer Bushveld Minerals’ energy subsidiary, Bushveld Energy, is underway with its first energy storage project that will see the company commission a utility-scale vanadium redox flow battery in June 2018.

The VRFB, which is the first utility-scale VRFB to be commissioned in South Africa, is being installed and tested at state-owned power utility Eskom.

AUTHOR: Mining Review Africa's senior deputy editor, Chantelle Kotze.

Headed by CEO and co-founder Mikhail Nikomarov, Bushveld Energy was established in 2016 to specifically explore opportunities for the use of vanadium in the energy market.

While much of the hype around energy storage has been around lithium-ion batteries, which are able to power almost everything – from personal electronic devices to electric vehicles – there is a need for bigger batteries that are able to store much more power.

The VRFB is emerging as a solution to the challenge faced by the renewable energy generation sector for storing energy – as the energy is not always generated at the same time as peak demand occurs.

This means that VRFBs can be used to store energy for use at peak load times on conventional energy grids or when the renewable energy system is not producing energy, for example, when the sun is not shining or the wind is not blowing in the case of solar and wind power, respectively.

There are also many other suitable application for VRFBs within the transmission and distribution network, mini and smart grids, as well as behind-the-meter applications.

Global energy market fundamentals

The vanadium market is in a deficit. While vanadium demand has remained strong and is continuing to increase, primarily driven by the energy storage market but equally so by the steel sector.

The new high strength rebar standard that was passed in February 2018 is predicted by some analysts to add as much as 30% to global vanadium demand.

Illustrating the significant increase in vanadium demand from the energy sector alone, Nikomarov notes that just three years ago, energy storage applications accounted for less than 1% of vanadium consumption.

In 2017, this number had grown to approximately 5% and is estimated will be as much as 20% of global vanadium demand by 2030.

Both Nikomarov and Bushveld Minerals founder and CEO Fortune Mojapelo expect this percentage will be reached sooner judging by the uptake of VRFB systems globally.

The case for VRFB use

The biggest energy storage systems that are being deployed are VRFB systems, notes Nikomarov.

Illustrating this is clean technology innovation company Pu Neng, which was awarded a contract in November 2017 to build one of China’s largest VRFBs.

The project that has been described as a ‘glimpse into the future’ of the Chinese electricity grid in light of the country’s decision to halt construction of many coal-fired power plants and instead push the integration of renewable energy with energy storage.

Pu Neng will initially build a 3 MW, 12 MWh small scale VRFB demonstration plant in Zaoyang in China’s Hubei Province to integrate a large solar photovoltaic system into the grid which will be followed by a larger 100 MW, 500 MWh energy storage project that will be the cornerstone of a new smart energy grid in Hubei Province.

Meanwhile, vanadium flow battery manufacturer Rongke Power is also building a 200 MW, 800 MWh VRFB in the Dalian high-tech zone in China’s Liaoning Province.

Taking the VRFB lead locally

In line with Bushveld Minerals’ strategy of becoming the world’s largest integrated primary vanadium platform, the company will vertically grow the business through the supply of vanadium electrolyte for VRFBs for the energy storage sector in the medium term and establish a regionally-oriented assembly and manufacturing capacity in the long-term – creating a global VRFB supply chain in South Africa with the added benefit of creating a captive market for Bushveld Minerals’ vanadium production.

To realise this, Bushveld Energy’s first job was to undertake a market study to identify VRFB demand in Africa, as well as global vanadium electrolyte demand. In partnership with the Industrial Development Corporation (IDC) of South Africa, the parties undertook a study in the second half of 2016 which concluded in August 2017 that favourable demand for VRFBs, particularly in the utility (including transmission and distribution networks) and off-grid, as well as mini-grid markets exist, with demand expected to peak in 2025 to 2030.

The study also found that global electrolyte demand is likely to peak during the same time frame and that Bushveld would be able to compete cost effectively for not just the electrolyte market in Africa but other regions, as well.

This study subsequently prompted Bushveld Energy’s first project - the deployment of a utility-scale VRFB.

VRFB deployment project at a glance

“Following Eskom’s identification of the need for potentially up to 2 000 MW of additional energy storage within the existing South African grid, Bushveld Energy approached Eskom to install a VRFB to demonstrate to the utility the value proposition of a VRFB and the energy storage opportunities it offers in terms of their storage requirements,” says Nikomarov.

The project is being co-developed by Bushveld Energy and the IDC with the system being deployed at Eskom’s Research, Testing and Development (RT&D) Centre in Rosherville, South Africa – allowing Eskom to test the VRFB, its performance and applications under numerous simulations.

Nikomarov notes that the trial unit is a small solution specifically designed to address Eskom’s energy-to-power ratio and size requirements. It is meant to assist the utility with peak-shaving, and to supply stored energy to the grid during periods of peak energy demand.

The simulations on the VRFB will include minimum load shifting, wind generation smoothing, solar generation smoothing, power quality improvement and self-black-start capability.

“This deployment is a critical stepping stone for both Bushveld Energy and the energy storage market in South Africa as it brings new technology to South Africa to make the local power system more efficient,” says Nikomarov.

Once commissioned, the testing process of the VRFB is planned to last for 18 months, after which the system will be redeployed to a commercial site within South Africa to provide maximum benefit taking into consideration the outcomes of the test work results.

Evaluating electrolyte production potential

In parallel to the market study, Bushveld Energy and the IDC undertook a techno-economic study to evaluate the merit of establishing a vanadium electrolyte production plant in South Africa.

The study determined the viability of establishing a scalable plant with an initial production capacity of 200 MWh per annum that can be increased to 400 MWh.

An initial capital expenditure for such a plant has been determined as R130 million, with roughly 75% of the capital cost being the balance of plant rather than production-specific equipment.

Significant scope exists to reduce the capex further through co-locating the purification section of electrolyte plant with Bushveld Minerals’ Vametco mine and plant in Brits.

According to the study, the main driver of costs is the vanadium feedstock.

This makes locally available, low-cost supply a critical success factor for vanadium electrolyte production and provides a natural competitive advantage for South Africa.

In-house and international testing confirmed the viability of using the Vametco feedstock to produce various types of battery-grade electrolyte.

Efforts now underway include the finalisation of potential sites for the actual electrolyte manufacturing plant.

A dual locational strategy for electrolyte production is preferred to shorten the environmental approval process (currently under way), reduce upfront capital and take advantage of local government incentives.

“We would ideally like to begin construction of the plant in 2018, but the start of construction remains a function of how long the environmental licensing will take,” says Nikomarov.

What places us in a good position is that our business strategy of producing our own vanadium at a low cost and enabling us to participate in the downstream energy market profitably, has and will allow us to manage vanadium price volatility,” he concludes.